DELAFIELD, Wis. (Stockpickr) -- Professional traders running mutual funds and hedge funds don't just look at a stock's price moves; they also track big changes in volume activity. Often when above-average volume moves into an equity, it precedes a large spike in volatility.
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Major moves in volume can signal unusual activity, such as insider buying or selling -- or buying or selling by "superinvestors."
Unusual volume can also be a major signal that hedge funds and momentum traders are piling into a stock ahead of a catalyst. These types of traders like to get in well before a large spike, so it's always a smart move to monitor unusual volume. That said, remember to combine trend and price action with unusual volume. Put them all together to help you decipher the next big trend for any stock.
With that in mind, let's take a look at several stocks rising on unusual volume recently.
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NetEase
NetEase (NTES), through its subsidiaries, operates in online games, Internet portal and e-mail and wireless value-added services businesses in the People's Republic of China. This stock closed up 1.5% at $85 in Wednesday's trading session.
Wednesday's Volume: 806,000
Three-Month Average Volume: 356,752
Volume % Change: 122%
From a technical perspective, NTES trended modestly higher here right above some near-term support at $81.42 with above-average volume. This stock has been downtrending over the last month and change, with shares moving lower from its high of $90.77 to its recent low of $81.42. During that downtrend, shares of NTES have making mostly lower highs and lower lows, which is bearish technical price action. That said, shares of NTES have now started to rebound off that $81.42 low and it's quickly moving within range of triggering a near-term breakout trade. That trade will hit if NTES manages to take out its 50-day moving average of $86.28 with high volume.
Traders should now look for long-biased trades in NTES as long as it's trending above Wednesday's intraday low of $82.65 or above more near-term support at $81.42 and then once it sustains a move or close above its 50-day at $86.28 with volume that hits near or above 356,752 shares. If that breakout kicks off soon, then NTES will set up to re-test or possibly take out its next major overhead resistance levels at $90.08 to $90.77, or even its 52-week high at $91.06. Any high-volume move above its 52-week high at $91.06 will then give NTES a chance to make a run at $95 to $100.
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Advent Software
Advent Software (ADVS) provides software products and services for automating and integrating data and work flows across the investment management organization, as well as between the investment management organization and external parties worldwide. This stock closed up 4% at $33.49 in Wednesday's trading session.
Wednesday's Volume: 720,000
Three-Month Average Volume: 296,403
Volume % Change: 165%
From a technical perspective, ADVS ripped sharply higher here right off its 50-day moving average of $32.05 with above-average volume. This strong spike higher on Wednesday also pushed shares of ADVS into breakout territory, since the stock took out some near-term overhead resistance at $33.25. Shares of ADVS are now quickly moving within range of triggering another big breakout trade. That trade will hit if ADVS manages to clear Wednesday's intraday high of $33.55 to some more key overhead resistance levels at $34.59 to its 52-week high of $36.11 with volume.
Traders should now look for long-biased trades in ADVS as long as it's trending above its 50-day at $32.05 or above its 200-day at $31.15 and then once it sustains a move or close above those breakout levels with volume that's near or above 296,403 shares. If that breakout hits soon, then ADVS will set up to enter new 52-week-high territory above $36.11, which is bullish technical price action. Some possible upside targets off that breakout are $40 to $45, or even $50.
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TrueCar
TrueCar (TRUE) operates as an Internet-based information, technology and communication services company. This stock closed up 11% to $23.06 in Wednesday's trading session.
Wednesday's Volume: 2.66 million
Three-Month Average Volume: 964,209
Volume % Change: 375%
From a technical perspective, TRUE exploded sharply higher here right above some near-term support at $19.51 with heavy upside volume flows. This strong move to the upside on Wednesday pushed shares of TRUE into breakout territory, since the stock took out some near-term overhead resistance at $21.90. Shares of TRUE are now quickly moving within range of triggering another big breakout trade. That trade will hit if TRUE manages to clear Wednesday's intraday high of $23.88 to its all-time high at $24.84 with high volume.
Traders should now look for long-biased trades in TRUE as long as it's trending above Wednesday's intraday low of $20.51 and then once it sustains a move or close above those breakout levels with volume that hits near or above 964,209 shares. If that breakout materializes soon, then TRUE will set up to enter new all-time-high territory, which is bullish technical price action. Some possible upside targets off that breakout $30 to $35.
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eLong
eLong (LONG) operates as an online travel service provider in the People's Republic of China. This stock closed up 7.5% to $19.79 in Wednesday's trading session.
Wednesday's Volume: 96,000
Three-Month Average Volume: 30,062
Volume % Change: 125%
From a technical perspective, LONG spiked sharply higher here right off its 50-day moving average of $18.39 with above-average volume. This spike to the upside on Wednesday is now quickly pushing shares of LONG within range of triggering a big breakout trade. That trade will hit if LONG manages to take out some near-term overhead resistance levels at $20 to $21 and then above some past overhead resistance at $21.73 with high volume.
Traders should now look for long-biased trades in LONG as long as it's trending above its 50-day at $18.39 or above its 200-day at $17.40 and then once it sustains a move or close above those breakout levels with volume that hits near or above 30,062 shares. If that breakout hits soon, then LONG will set up to re-test or possibly take out its next major overhead resistance level at its 52-week high of $24. Any high-volume move above $24 will then give LONG a chance to make a run at $30.
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To see more stocks rising on unusual volume, check out the Stocks Rising on Unusual Volume portfolio on Stockpickr.
-- Written by Roberto Pedone in Delafield, Wis.
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At the time of publication, author had no positions in stocks mentioned.
Roberto Pedone, based out of Delafield, Wis., is an independent trader who focuses on technical analysis for small- and large-cap stocks, options, futures, commodities and currencies. Roberto studied international business at the Milwaukee School of Engineering, and he spent a year overseas studying business in Lubeck, Germany. His work has appeared on financial outlets including CNBC.com and Forbes.com. You can follow Pedone on Twitter at www.twitter.com/zerosum24 or @zerosum24.
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